MLM Glossary – D

Distributor:

One that markets or sells the products or services of a multi-level marketing company. Distributors, often called Independent Distributors, are independent business owners operating in partnership with their chosen mlm company. In the United States, distributors operate under a 1099 Tax Form that is used to declare various types of income other than wages. Distributors are also referred to as Representatives, Reps, Partners, and Independent Distributors.

This term refers to a representative of an MLM company who sells the firm’s products or services. This representative is also encouraged to build his own team/organization by recruiting and enrolling additional sales force known as downline/members. These members may also be called distributors and may sign up their own members who will also form part of the team or organization.

Independent distributors are not salaried employees of the company but rather profit from the sales of a particular network marketing company’s merchandise. These distributors may also earn a certain percentage from the sales their downline makes. This type of marketing setup requires training, support and cooperation within a particular organization to succeed and realize unlimited income over time.

Becoming a distributor requires an interested party to enroll in his preferred network marketing company and pay a corresponding fee. He then receives a starter product kit equivalent to the amount he paid upon enrollment.

Distributor Agreement:

A contract governing the marketing of an item of merchandise within a multi-level marketing company. This document often includes the code of conduct, compliance policies, and other behaviors expected of distributors.

Distributor Kit:

Is the kit required for purchase in order to enroll as a distributor. Distributor kits are often available in different sizes and price-points, but selection depends primarily on the ambition of the enrolling distributor. These kits often include training tools, marketing materials, branded apparel, and samples of the company’s products. While many people skeptical of the industry wonder why you must purchase products in order to sell them, the product included in the kit is best utilized for sale or demonstration, thus growing the distributor’s new mlm business. It is advantageous to partner with a multi-level marketing company that will drop-ship any physical products to customers. This negates the need for distributors to invest any significant amount of money into stockpiling inventory of products.

Downline:

Refers to the members distributors have recruited or who have joined the organization after their enrollment and whose sales or referrals also generate income for that distributor.

Drop-Shipping:

A supply chain management tactic in which the distributor does not keep physical goods in stock, but instead transfers any customer orders and shipment details to the multi-level marketing company with which they have partnered, who then ships the products directly to the customer. As in retail businesses, the majority of distributors make their profit on the difference between the wholesale and retail pricing but some earn an additional percentage of the sales in commission, paid by the multi-level marketing company.

Duplication:

The process of taking knowledge from previous experience and showing others how to do the same. Often said to be one of the keys to building a successful multi-level marketing business, it is where a successful distributor teaches a new enrollee how to duplicate their efforts and their success. Distributors are often reminded to “keep it simple” as it is more easily duplicated amongst their downline.